Black Americans have relied on cooperatives since the 19th century, when both free and enslaved Black people would pool their money to pay for things like burials, helping the sick and orphaned, and even buying freedom for one another. And what’s possibly the most famous cooperative effort in this country’s history? The Underground Railroad.
But for obvious reasons, a lot of these cooperative efforts were kept quiet. When groups like the Colored Farmers’ National Alliance and Co-operative Union created buyers’ co-ops that took profit away from White-owned businesses, it led to retaliation. So these co-ops were at the same time sorely needed and risky.
Perhaps it’s not too surprising that the story of Black credit unions often starts with a general “in the 20s and 30s” – during what we often think of as the first groundswell of the American credit union movement.
It’s time to learn about Thomas B. Patterson and Piedmont Credit Union.
Less than three years after the state of North Carolina authorized credit unions in 1915, to be overseen by the State Agricultural Department and the State College of Agriculture and Engineering, Thomas Patterson established the first Black credit union. He wrote about the experience in The Southern Workman in 1920 in an article title “Negro Credit Unions of North Carolina:”
“The Piedmont Credit Union of Landis was organized April 19, 1918, with twenty-three members and a paid-in-capital of $126. It was the first effort ever made to organize a credit union among Negro farmers, so it was intended merely as an experiment to study the advisability of continuing such an organization. The experiment was so successful that three other unions were organized in different parts of the county. During the year just passed nine credit unions were organized in another county of the State, making thirteen Negro organizations up to date.”
As of Dec 31, 1919, Piedmont had 82 members, 6 depositors and 10 borrowers, with total resources of $1347.83. There was a $50 loan limit on cash loans for food supplies, as most loans were made for farm supplies and home or farm improvements.
The aim of Piedmont was to eliminate dependence on supply stores, where Black farmers could buy what they wanted on “time” but often at a highly marked-up price, and found that this left them with no profit after crops came in:
“Now the credit unions steps in here, takes the place of the supply store, and lends the farmer member sufficient cash, at a reasonable rate, to buy his supplies in the open market, saving himself the time prices, which no doubt are always higher. In other words, the credit union recognizes the fact that no farmer tied to the supply store can reasonably be expected to render good service, become a good citizen, or do efficient work so long as he is thus handicapped.”
So now instead of crushing interest rates, Patterson explains, “A member can borrow from a few dollars up to a hundred, or more for any length of time within the current year. He is charged at the rate of six per cent interest for the actual time he has the loan. His word in the community and his ability to repay the loan are his chief assets. The name of some other man of standing in the community, couple with his on his note, usually procures his loan with very little, if any, delay.”
It's worth pausing a moment to consider the impact this financial empowerment must have had on the Black farmers in North Carolina. Membership in a credit union meant that not only could they see their farms survive difficult years, they could actually build wealth, by refusing to “feed the lion of prejudice,” as Black banking titan Maggie Walker described it.
Black Americans' first taste of democracy came from cooperatives, entrenched in all members having an equal vote and, really, a vote at all at the time. The Black experience of cooperative finance is a key part of credit union history and credit unions, as always, were there to help the underserved.